How Much Does Home Ownership Truly Cost?

How Much Does Home Ownership Truly Cost?

Thank you again to Crystal Brady for joining us again on Waypoint Real Talk!

  1. Mortgage Payment
  2. Property Taxes
  3. Tax Benefits
  4. Insurance
  5. Maintenance & Repairs
  6. HOA
  7. Equity/Appreciation

These are the sections that total the true cost of home ownership. Let’s get into detail how much home ownership truly costs:

Mortgage Payment

This one is pretty simple. This is your total monthly mortgage payment. You should include in Property Mortgage Insurance (PMI) if you are responsible for that as well.

In almost all cases the mortgage payment actually consists of a total of the principal & interest on the loan, property tax, and homeowners insurance all rolled into that one payment. 

Property Taxes

Property Tax payment can be calculated easily by doing a quick Google Search with your state and county to find the average payment.

The national property tax average is 1.24% per year of the purchase price. So, for every $100,000 the average tax is $103/month.

Here is a good resource to find your approximate property tax.

Tax Benefits

For those that use the standard deduction when filing taxes, there will most likely not be any income tax benefits to homeownership. This is typically filled out when you file your taxes through a service like TurboTax.

However, if you itemize your deductions then you can deduct your mortgage interest and sometimes other expenses relating to the initial purchase. You should speak with your accountant if you are interested in these benefits.

Home Insurance

Home Insurance is typically calculated by your lender during the pre-approval process. However, the amount you pay in insurance can vary greatly by your specific location. (Some locations might be prone to flooding, earthquakes, hurricanes, and more).

It is best practice to speak with your lender about how much you might be paying to find the an approximate.

Home Owners Associations (HOA)

HOA cost ultimately depends on the area. You can have a cheaper HOA that just mows your lawn, or, you can have an expensive HOA that has many amenities and benefits.

Be sure to speak with your Realtor about the HOA documents/cost before purchasing a home.

Mortgage lenders actually quote HOA as part of the monthly payment since it will be a financial obligation for the buyer and the lenders want to make sure they can afford it. However, it is a separate check that the buyer has to write. But they would be aware of this upfront.

Summary on Mortgage Payment Costs

Your mortgage payment actual cost is usually totaled from your loan amount, interest, insurance, and taxes. Since the mortgage payment can vary greatly, you can speak with a lender to find an approximate for your area.

Furthermore, once as home buyer receives a pre-approval for a home loan, better approximates are given. As the purchase process progresses, the lender is able to give more exact numbers to mortgage payment costs.

Maintenance & Repairs

Assuming your home is in perfect condition, you will need to maintain/repair the following consistently:

  • Roof
  • Plumbing
  • A/C
  • Electrical
  • Paint
  • Pool/Landscaping

The amount you will have to maintain/repair is dependent on the age of the products, product quality, and weathering conditions.

Roofs

Roof cost is on average $4/square foot and lasts about 17-20 years (shingle roofs only) in Florida depending on your home’s location. If you are near the beach you should expect your roof to last much less. If you are more inland, you can expect your roof to last longer.

Quick Calculation for Roof Cost

1800 square foot home = $7,200 = $35/month for roof replacement at 17 years.

If you want to learn more about roof lifespan and costs. Check out our roof category.

Plumbing

Plumbing costs depend on your home’s age and current conditions. Older systems will need to be updated/replaced while newer systems like PVC and PEX can last up to 100 years.

However, your water heater will have to be replaced every 12-15 years if it is kept in a garage or indoors. This can be on average about $500 depending on if it is gas or electric. This comes out to about $3/month if you need to replace your unit every 12 years.

More Resources

Read more about water age and life expectancy.

You will need to replace plumbing if you have cast iron or polybutylene.

Air Conditioning

A/C and heating systems last about 10-12 years. Also, they can cost about $5,000 on average to replace the air handler and air conditioner. (the A/C is typically replaced in a package).

Read more about A/C lifespan.

Painting

Painting is absolutely essential to maintain your home in Florida. Paint is your first layer of defense from water intrusion! In Florida, you should paint your home every 5-10 years depending on the paint quality and weather conditions.

Paint Costs

The cost is about $2,500 for the average sized home. $2,500 = $30/month for replacement every 7 years.

Resources

Learn more about paint failing and replacement.

Electrical

Updating electrical on a new home is generally not needed. However, in older homes it may be required to obtain or keep your insurance.

Be sure to read our articles in the electrical category to find out if your home may have electrical hazards that need maintenance or replacement.

More Resources

If you have these items below, you may have to replace in order to sell your home or obtain/keep insurance.

Knob & Tube, Two-Prong Outlets, Challenger Panels, Sylvania Panels, FPE Panels, Aluminum Wiring, or Cloth Wiring.

Pools

Pools ultimately depend on the age and type. However, pool resurfacing is typically completed every 15 years and can be costly (few thousand).

Concluding on Maintaining a Home

Based on the above projections/estimates: You should budget $100/month in home maintenance/repairs on the average sized home. This does not include home investments like kitchen remodels. If your home is significantly older, larger, or newer, your maintenance savings should move accordingly.

Moreover, once you move into a home, a home inspector should have told you which items you may have to replace sooner rather than later.

An important note: people move on average every 7 years. Therefore, although you may not need to pay out on some items listed above like the pool resurfacing, you may end up accepting the cost when you sell the home as the home inspector will catch those items.

From Crystal Brady:

Suggestions when shopping for a home: your realtor should ALWAYS get you as much info as possible on the age and condition of big ticket items: i.e. roof, a/c, water heater, exterior paint/condition, pools (if applicable) and items you can see visually should be inspected by buyers closely during showings for homes they are considering such as the electrical panel, plumbing under sinks, etc. I always tell my buyers the goal is that we should get as much information on the age and systems in the home as possible so that hopefully by the time we get to the Home Inspection it will just be items we had no way of being able to see or test (that inspectors do check) and hopefully just a list of Home Depot do-it-yourself type repairs and no big surprises. For example, if I know the roof is 20 years old then I know and expect the home inspectors are going to tell me it’s time for replacement. If I have already forewarned the buyer then they are budgeting for that large item prior to the home inspection and it is not a surprise.

Another option buyers should consider to mitigate the cost of repairs during home ownership is to consider getting a home warranty.

Crystal Brady, Realtor

Home Equity and Appreciation

On average, in a normal market, homes typically appreciate 2-3% per year. In our greater Tampa Bay area, due to a shortage of inventory, we have seen higher than normal appreciation year over year because we are in more of a Seller’s market.

Your home resell value is dependent on your location and the renovations you have completed. You can speak with Realtors that are experts in your area to find your home’s value as talked about in the video above.

Concluding

On the average sized home, you should budget $100/month for home repairs/maintenance. This does not include home additions and renovations.

Mortgage payments are usually lump summed with taxes, insurance, and HOA’s with your mortgage lender. To find exact amounts, you should speak with your lender.

Zillow, although a great resource, should not be taken for advice on payments.

Have more questions? Comment below!

Aaron Shishilla

Author Aaron Shishilla

Aaron Shishilla is the youngest registered professional inspector in Florida. Coming from a family-owned home inspection company and now the marketing manager at Waypoint.

More posts by Aaron Shishilla

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